Papers react to Barroso’s ‘Tobin Tax’ proposals

President José Manuel Barroso has outlined a proposal by the European Commission to introduce a new tax on financial transactions, which could raise over €55bn annually.

The proposal came in his annual State of the Union address to the European Parliament.

“In the last three years, member states have granted aid and provided guarantees of 4.6trn euros to the financial sector. It is time for the financial sector to make a contribution back to society,” he said.

Reaction from different parts of Europe have been swift.

Sweden’s Dagens Industri noted that Algirdas Semeta, European commissioner for Taxation and Customs Union, Audit and anti-Fraud, backed up Barroso’s statement with his own.

“The tax would be levied on all transactions on financial instruments between financial institutions when at least one party to the transaction is located in the EU. The exchange of shares and bonds would be taxed at a rate of 0.1% and derivative contracts, at a rate of 0.01%. This could approximately raise €57 billion every year. The Commission has proposed that the tax should come into effect from 1st January 2014.”

“With this proposal the European Union becomes a forerunner in the global implementation of a financial transaction tax. Our project is sound and workable. I have no doubt this tax can deliver what EU citizens expect; a fair contribution from the financial sector. I am confident that our partners in the G20 will see their interest in following this path.”

Denmark’s Børsen links the speech to ongoing efforts to make the EFSF more effective and efficient, as well as resistance from German central bankers to any gearing of the EFSF – because of fear over inflation “that such an unlimited European liquidity machine could lead to.”

Germany’s Frankfurter Allgemeine Zeitung notes Barroso’s various comments to the European parliament met with “broad agreement. In particular his criticism of the threatening isolationist moves by the eurozone countries met with applause in parliament. Social democrats and greens, who would otherwise strongly oppose the commissions president in debates welcomed the fact that he wanted to defend the [concept] of communcal action.” The paper noted social democrat faction leader Martin Schulz had praised Barroso for his “fighting words”.

Financial Times Deutschland highlights Great Britain’s opposition to the planned tax. “The country fears that traders could leave Europe’s largest financial centre – London – in the direction of Asia”, the paper says. “With millions from the public hand, banks had to be saved from collapse. EU Commission president Barroso wants some of that back by a new exchange tax,” the financial paper says. It says Barroso’s call for the Tobin tax in all 27 member states came “despite bitter British opposition”. The paper also noted the tax was supported by German chancellor Angela Merkel and French president Nicolas Sarkozy.

Die Welt reports Barroso’s calls for the financial sector to do its share of contribution, as farmers and employers already make their full contribution. The paper reports Barroso’s expectations to earn €55bn from the tax, and his thoughts that the EU needs more income to consolidate its finances.

Germany’s Berliner Morgenpost says “speculation on European financial markets are to be taxed in future,” also citing Barroso’s claim it was “a question of fairness”. The Morgenpost takes a generally kind approach to Barroso’s words, quoting him: “If our farmers, workers and all realms of business contribute their share to society, so too should the financial sector.” It links Barroso’s pleas with the need for European governments to find “European solutions” to their problems. It notes: “The commission is the guarantor of fairness.”